You can learn a lot from your competitors. You can learn from their mistakes and from their successes. Maybe you see something that your competitors supply and you want to give your customers the same thing, but you think that you can provide a far superior experience. Or maybe you see something that your competitors are doing which is not working for them, telling you it is something that you should think twice about. You can benchmark yourself against your competitors as a starting point for your own improvement, guiding you on where to focus your own efforts next. And looking at your competitors builds a shared team understanding of the competitive landscape.
Sticking your nose in your competitor’s business like this might seem nosey, but it is actually a widespread industry practice known as competitor analysis.
My experience with competitor analysis
I’ve conducted a competitor analysis for almost every company I’ve worked with. They have varied from basic to complex, small scope to large scope, for individual elements or for whole user journeys. I have been part of some that have taken just a couple of hours, others up to a day – the point is that they should be fast to carry out so that you and your team can move forward quickly. Some may believe that conducting a competitor analysis is expensive, or is something to be outsourced, but neither of these have to be the case.
In my experience, there are four core elements to consider when carrying out a competitor analysis:
- Select your competitors to analyse
- Define your criteria
- Rating your competitors against your criteria
- Benchmarking the criteria
Select your competitors to analyse
Just because you are a car insurance company, doesn’t mean your only competitors are other car insurance companies like you. Perhaps there are travel companies that sell packages that include car insurance for people whilst travelling. Other types of organisations – from banks to supermarkets – also offer car insurance cover in addition to their own core business. A common gap that I often see are organisations that do not really know who their competitors actually are. Many users are prepared to shop around to see what options are out there – you should too. The starting point is to understand your users and their interests, and start there.
That is not to say that you should build a long list of competitors to analyse. There is no magic number, and it depends on your context and what you want to learn, but I would say between four and six is a good range to aim for.
Define your criteria
When looking at your competitors, you need to be tactical about what to look at. You cannot (and shouldn’t) spend a load of time looking at every possible aspect as you would end up overloaded with data, and the whole thing would take weeks or even months. Be clear on what it is that you want to learn. For example, is it to understand the overall service that the competitor has to offer? Or how they interact with their customers? Or the way they present their brand?
One specific example for an e-commerce company could be to look at how a user can search for products on a competitor’s website, and how the results are displayed. This may mean focussing on things like:
- Tone of voice
- Terminology used
- Search location
- Search filters
- Search performance
- Search results location and layout
- Content of results returned
- Most important information
- Call to action
The main thing is to focus on what is most important to you in your context.
Having defined the criteria that you are going to analyse, you need to define your system for rating it. It doesn’t need to be anything fancy, just something that acts as a conversation starter with guidance that makes it clear on how you’ve arrived at particular ratings. Scoring is always going to be subjective, it is about the ensuing conversations and not so much about the score at the end of the day. I generally like to use a simple RAG status, or scoring from 1 to 5. Taking RAG as an example, I would include some guidance such as:
- Red – poor
- Amber – ok
- Green – good
Rating your competitors against your criteria
When it comes to carrying out the actual analysis, sometimes I do this on my own, sometimes I do it collaboratively with my teammates. I would always encourage other team members to get involved, but whoever does take part is always context specific in my experience.
When it comes to carrying out the actual analysis, team members would go through the list of competitors and look at each criteria, giving each a rating. I’d also encourage everyone to write a few simple notes.
Benchmarking the criteria
Once the rating has been completed, collate the results and display them in a form that enables you to make comparisons between your different competitors. A simple table works well in my experience. You may also want to score your own offering as part of the exercise to see how it compares.
Here’s an example where the RAG ratings have been converted to a numerical score. Another reason I like RAG instead of using a straight numerical range is the visual element you get with colours, helping you to see at a glance which competitors score well and which ones not so well.
A table like this enables you to quickly see which competitor stands above the rest. In this example. competitor 3’s website was superior overall, however our own search filters came out on top, with our website coming second overall (and to emphasise, this is a fictitious example, even so, I couldn’t give myself too bad a score!). I can quickly see that I might be able to learn from competitor 3’s website how to make our own search bar better, and how to improve the search list from competitor 2’s and competitor 3’s websites.
Competitor analysis can help you to spot gaps in the market, see market trends, and give you ideas to improve the products and services that you provide. I hope that I have given you some insights into the technique and inspired you to give it a try!
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